IEG SPONSORSHIP REPORT THE LATEST ON SPORTS, ARTS, CAUSE AND ENTERTAINMENT MARKETING JANUARY 7, 2013 WWW.IEGSR.COM I N DEPTH 2013 SPONSORSHIP OUTLOOK: SPENDING INCREASE IS DOUBLE-EDGED SWORD Marketers willing to spend on integrated partnerships that deliver substantial benefits. Due in large part to major partnerships that are redefining traditional sponsorship and in many cases making the term obsolete IEG is projecting significant sponsorship spending growth for 2013, even in the face of overall economic volatility. The 28th annual year-end industry review and forecast from IEG projects an increase of 5.5 percent in sponsorship spending by North American companies this year over 2012. Globally, IEG forecasts 4.2 percent growth. North America s 2013 increase is higher than in 2012, when spending grew 4.4 percent over 2011 to $18.91 billion. (IEG had forecasted 4.1 percent growth a year ago.) For 2013, the total spent is projected to be $19.94 billion. Worldwide, 2013 growth will not be as robust as 2012. Global spending increased 5.1 percent last year to $51.1 billion (IEG had forecasted 4.9 percent growth.) The total to be spend in 2013: $53.3 billion. TOTAL NORTH AMERICAN SPONSORSHIP SPENDING 2013 IEG, LLC. ALL RIGHTS RESERVED. 1
TOTAL GLOBAL SPONSORSHIP SPENDING Behind The Numbers The most important factor in projecting healthy sponsorship growth is the unprecedented recognition at the highest levels of corporations that sponsorship is a potent answer to the challenge of how to build attention, support and loyalty for brands in an environment that is otherwise hostile to marketing communications. Sponsorship has become elevated to the corporate strategic planning conversation and is more likely to be discussed in the context of integrated marketing programs that can take advantage of the reach of traditional advertising as well as the emotional and experiential benefits earned through partnerships with sports, entertainment, cause and cultural entities. Although moving sponsorship out of its silo and into the mainstream marketing conversation is, overall, a remarkably positive development, it carries meaningful ramifications. On a base level, what used to be clearly identified as sponsorships, with discrete budgets and contracts, are now far more likely to be part of multi-platform, cross-channel programs in which a partnership is just one element, and where multiple players have a role in planning, execution and evaluation. More importantly, while this development means marketers generally have growing appetites and resources for significant investments in B2C and B2B partnerships, they also have raised the stakes, increased the number of internal decision-makers, and placed many more demands on rightsholders to prove value and return. The upshot: The sponsorship pie is growing, but being cut into fewer pieces. The largest slices are reserved for properties that can meet the high standards required by a new breed of corporate partner. The winners are typically large rightsholders that come with broadcast or other major media as part of the deal, a national footprint or an extremely high level of prestige. That trend is reflected in the North American breakdown of sponsorship spending by category, where once again sports and entertainment will grow at a faster rate than other types of partnerships and will continue to command nearly eight out of ten sponsorship dollars. 2013 IEG, LLC. ALL RIGHTS RESERVED. 2
NORTH AMERICAN SPONSORSHIP SPENDING BY PROPERTY TYPE PROJECTED 2013 SHARES OF NORTH AMERICAN SPONSORSHIP MARKET Sponsorship Compared to Other Marketing Spends Once again the growth rate for sponsorship spending will surpass outlays for traditional advertising in North America. On the heels of a 3.5 percent increase in media expenditures in 2012, ad spending is expected to grow only 2.6 percent this year, according to the worldwide media and marketing forecast produced by GroupM, the global media investment management operation of WPP Group plc. (GroupM is the parent company of IEG SR publisher IEG, LLC.) Spending on consumer and business-to-business promotions such as direct marketing, sampling, and trade shows is expected to grow three percent this year following a 3.2 percent gain in 2012, according to the Communications Industry Forecast published by private equity firm Veronis Suhler Stevenson. 2013 IEG, LLC. ALL RIGHTS RESERVED. 3
ANNUAL GROWTH OF ADVERTISING, SALES PROMOTION AND SPONSORSHIP Asia Pacific Region Strong; Europe and South America Weaker Excluding North American sponsorship spending, sponsors from all other parts of the world spent $32.2 billion in 2012. That number should increase by 3.7 percent to $33.4 billion this year. Economic conditions in Europe will be a drag on sponsorship spending by European companies, with IEG forecasting growth of just 2.8 percent versus 4.7 percent in 2012. While Russian, Indian and Chinese companies will contribute to a healthy five percent increase from the Asia Pacific region, growth is expected to slow to just 2.6 percent in Central and South America, where the 2014 FIFA World Cup and 2016 Olympic Games have secured major sponsorships from companies both inside and outside of the region, but have failed to spur other local investments that were previously anticipated. GLOBAL SPONSORSHIP SPENDING BY REGION 2013 IEG, LLC. ALL RIGHTS RESERVED. 4
ABOUT IEG IEG leads the way in sponsorship solutions. With over 30 years providing insights, evaluation, and guidance, our teams bring unparalleled perspective and proven methodology to every challenge. We partner with top brands and properties to create fresh strategies, evaluate opportunities and maximize results. Our clients rise above competitors, meaningfully engage audiences and achieve lasting impact. A unit of WPP s GroupM, IEG is connected to specialty sibling communications companies in media, digital and activation. GroupM is the leading global media investment management operation that also serves as parent company to WPP media agencies including Maxus, MEC, MediaCom, and Mindshare. INSIGHTS EVALUATION GUIDANCE IEG LEADS THE WAY IN SPONSORSHIP ANALYSIS, INSIGHT, VALUATION & MEASUREMENT For more information about IEG and the sponsorship industry, please visit www.sponsorship.com or call 800/834-4850 (outside the U.S. and Canada, 312/944-1727). WWW. SPONSORSHIP.COM 2013 IEG, LLC. ALL RIGHTS RESERVED. 5